Bonds: Basically An IOU From A Company Or Government, Bonds Are A Relatively Safe Investment

Category: Finance.

Fifty years ago, the average worker didn' t need to worry about saving for his retirement.

Still, those same workers generally saved about 10% of their paychecks for a rainy day, leaving many with a tidy retirement fund. If he stayed with the same company for 20, 25 or 30 years, he was guaranteed a pension, in addition to a monthly social security check form the United States government, and medical benefits under Medicare. Today's workers aren' t offered those same retirement benefits, many fail to, yet put even 5% of their annual salary into a 401K retirement plan, let alone save additional funds on top of that. Whether you can put aside$ 50 a month, or$ 500, learning a few investment basics is crucial in order to get the best future bang for your current buck. Today's worker, (no matter how much, or how little they make) , must become a savvy investor in order to guarantee a comfortable future. Here are a few of the most common investment opportunities available to both the high and low- end investor: Stocks: Stocks, are a way, or equities to invest a small portion of ownership in a specific company.

Known as the best opportunity for long- range growth, stocks can be a risky short- term investment. The number of shares that you buy, in proportion to the number available, determines how much of the company you actually own. There are three types of stocks available for purchase: -Large- cap stocks, from well- established companies. -Small- Cap stocks, represent lesser- known companies with fast- growth potential. -Mid- Cap stocks, lie between the large- cap and small- cap risk range. Bonds are issued as a way for corporations and government agencies to raise money quickly. Bonds: Basically an IOU from a company or government, bonds are a relatively safe investment. Bonds come with a guarantee that the purchaser will get back their original investment, with a set amount of interest at a specific date. Cash Equivalents: This is a type of short- term investment that is easily converted into cash, such as Treasury or T- Bills( a government note offering low interest) and money market accounts, Although a safe investment, their return can be rather low.

These fixed- income investments come in several categories, or grades: -AAA, AA or A offers relatively low risk. -BBB, are medium grade. -Bonds lower than BBB have higher risk of default. -Junk Bonds, offer the highest risk, and are often worth nothing by their maturation date. Mutual Funds: This popular investment is a simple way to expand your investment portfolio, by allowing investors to pool their money in a collection of stocks, and cash equivalents, bonds, in order to make the most profit at the least risk. Investing money wisely takes a little research and experience, but today's options make investing an option for just about everyone- no matter how much or how little they have to invest. The rationality with this type of investment is, if one fund does poorly, another will make up for the loss.